Public life is being shut down more and more. Shops remain closed, hotel bookings are being cancelled. Many offices of Engel & Völkers Commercial also remain closed for the protection of customers and employees; communication has been shifted to the telephone and Internet.
The retail trade, hotels and restaurants are currently the hardest hit. "Many businesses are nearing the end of their resilience tether," reports the German Hotel and Restaurant Association DEHOGA. How does this affect the economy in general and the property prices in the commercial sector in particular?
Commercial real estate: not all sectors are equally affected
The extent to which the commercial property market is affected by the COVID-19 pandemic depends primarily on which sub-market is being examined. The hotel and catering industry is currently experiencing the most significant losses, as is the retail sector. It is these sectors that are currently suffering the biggest loss of guests or customers. The cancellation of numerous international industry trade fairs also contributes to this negative trend. State aid is therefore needed, particularly in these sectors, in order to cushion a possible loss in value of such properties.
Market for office properties could relax
In many large cities, the market situation for office properties has been characterised by strong tensions in recent years due to high demand from investors. The fact that working life in many companies is currently increasingly shifting to the home office could lead to an easing of this market segment.
Logistics and production could benefit
Not all segments of the commercial property market need necessarily be negatively affected by the corona crisis. It is conceivable, for example, that companies will attach increasing importance to shorter logistics and production chains in the future. Accordingly, the segment for warehouses, production facilities and logistics centres could grow more strongly following the COVID-19 pandemic.
All statements made here, however, are currently only assumptions. There is currently too little market data available to make reliable statements about the future. You can learn even more about this topic on our regularly updated special page on property prices and the coronavirus.
How Engel & Völkers assesses the situation
Dirk Beller, Head of Commercial DACH at Engel & Völkers, draws an optimistic conclusion despite the current situation: "We are currently in a crisis, but it will pass. The most important thing at present is that everyone adheres to the recommended protective measures and that the number of people who fall ill remains within the limits of what our health system can respond to. Then the economy can also recover and the market for commercial real estate in every sector can pick up again. The bottom line is that investing in real estate remains a safe investment.”
Stay up to date on property prices with our special page on the coronavirus and its impact on property prices. We will keep you well informed about real estate even in times of COVID-19.